No one likes to think about the possibility of their own disability or the disability of a loved one. However, as we’ll see below, the statistics are clear that we should all plan for at least a temporary disability.
Most Americans Will Face At Least a Temporary Disability *
Study after study confirms that nearly everyone will face at least a temporary disability sometime during their lifetime. More specifically, one in three Americans will face at least a 90-day disability before reaching age 65 and, as the following graph depicts, depending upon their ages, up to 44% of Americans will face a disability of 2.4 to 4.7 years. On the whole, Americans are up to 3.5 times more likely to become disabled than die in any given year.
Many Americans Will Face a Long-Term Disability
Unfortunately, for many of us the disability will not be short-lived. According to the 2000 National Home and Hospice Care Survey, conducted by the Centers for Disease Control’s National Center for Health Statistics, over 1.3 million Americans received long-term home health care services during 2000 (the most recent year this information is available). Three-fourths of these patients received skilled care, the highest level of in-home care, and 51% percent needed help with at least one “activity of daily living” (such as eating, bathing, getting dressed, or the kind of care needed for a severe cognitive impairment like Alzheimer’s disease).
The average length of service was 312 days, and 70% of in-home patients were 65 years of age or older. Patient age is particularly important as more Americans live past age 65. The U.S. Department of Health and Human Services Administration on Aging tells us that Americans over 65 are increasing at an impressive rate:
Consider Long-Term Care Insurance to Cover these Costs
As the Harvard University study demonstrates, if you or a family member needs long-term care, the cost could easily deplete and/or extinguish your family’s hard-earned assets. Alternatively, you (or your family) can pay for long-term care completely or in part through long-term care insurance.
Most long-term care insurance plans let you choose the amount of the coverage you want, as well as how and where you can use your benefits. A comprehensive plan includes benefits for all levels of care, custodial to skilled, and you can receive care in a variety of settings, including your home, assisted living facilities, adult day care centers or hospice facilities.
Absent financial insolvency, government benefits for long-term costs are extremely limited – typically only for skilled care and only for a short duration. Given the costs of long-term care, discuss with your financial advisor how a long-term care insurance policy can meet your unique planning objectives.
While long-term care insurance will cover in-home or nursing home costs, it will not replace the income lost due to the inability to work. Therefore, income earners should also discuss with their financial advisor how a disability insurance policy can replace lost income if you become disabled.
Your Estate Planning Should Thoroughly Address Disability
Your estate planning should include properly drafted and well thought-out estate planning documents that address both your property and your person in the event you become disabled. Be sure to discuss this aspect of your planning with your estate planning attorney.
An estate plan that utilizes a revocable trust as its foundation not only helps ensure that you will be cared for as you desire, but it can ensure consistent asset management through the continued use of your existing financial advisors.
We understand that planning for your possible disability is difficult but important. Planning now may enable someone you trust to access your assets for your benefit without having to go through costly court proceedings.
Depending upon your circumstances, you may use powers of attorney or living trusts or structure your assets so they will be available when you are unable to handle your own financial affairs. We will explain all of your options and ensure that you have a plan in place to protect you and your family in case of disability.
* Source: The Elder Counselor TM